China's economic troubles may be making headlines, but they have to be seen in perspective, Deputy Prime Minister Tharman Shanmugaratnam said last night.
He told a forum that despite concerns and complexities over its current slowdown, China is the only major economy that actually has a middle-term plan. And if it can implement 60 per cent of what it has set out to do in its latest five-year plan, five years from now, it would be a transformed economy, he said.
Unfortunately, most major economies do not plan this far, beyond what their central banks are doing, he added.
Mr Tharman, who is also Coordinating Minister for Economic and Social Policies, identified China's transformation as both a challenge and an opportunity for countries around the world.
He highlighted two major changes the country is now undergoing.
One, China is at the end of an era of cheap labour, where it saw the migration of a large number of people from rural areas to cities.
There is now some reversal of this trend, with migrants in coastal cities heading back to their towns.
And the country has to deal with very significant localised unemployment that many advanced countries faced at this stage of their development.
It is hard to say whether China can avoid what happened elsewhere, but its economy as a whole is still growing at a reasonable rate.
And compared to the problem China faced in the late 1990s when millions of workers in state-owned enterprises were displaced, today's problem is much smaller.
Still, it will have to find a way of dealing with these problems in a fair and equitable way, Mr Tharman noted.
China is also moving up the value curve: What used to be a big bulge in the global labour force when China entered the world economy is now moving up to middle-skilled jobs and, in many coastal cities, to upper-level sophisticated jobs - competing with the middle-class everywhere.
The question, he added, is how countries can adjust to this so that trade and investment are win-win.
The second major change, he said, is that China is becoming an exporter of capital.
Last year, for the first time, China's direct investments abroad exceeded foreign investments entering the country. Calling this the start of a new phase of globalisation for China and the world economy, Mr Tharman likened anxiety over Chinese firms expanding abroad to that seen when Japanese firms first did so in the 1980s.
And as Chinese firms base themselves elsewhere, they also evolve their management methods, thinking and skills.
Mr Tharman said that while this was positive for China and the world economy, there was also a need to ensure the reverse: that China remains open to inward foreign direct investment.
Citing a report by McKinsey this week that said 700 large cities in China alone will account for 30 per cent of growth in global urban consumption between now and 2030, Mr Tharman said it was in everyone's interest to adjust to China's structural transformation.
"Every country stands to benefit from tremendous growth in future Chinese consumption," he said.